Medicare Administrative Contractor contract awarded to NHIC, Corp. for over $167 million
Contract Overview
Contract Amount: $167,216,994 ($167.2M)
Contractor: Nhic, Corp
Awarding Agency: Department of Health and Human Services
Start Date: 2008-11-14
End Date: 2015-03-11
Contract Duration: 2,308 days
Daily Burn Rate: $72.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: COST PLUS AWARD FEE
Sector: Healthcare
Official Description: JURISDICTION 14 PART A & B MEDICARE ADMINISTRATIVE CONTRACTOR
Place of Performance
Location: HINGHAM, PLYMOUTH County, MASSACHUSETTS, 02043
Plain-Language Summary
Department of Health and Human Services obligated $167.2 million to NHIC, CORP for work described as: JURISDICTION 14 PART A & B MEDICARE ADMINISTRATIVE CONTRACTOR Key points: 1. The contract represents a significant investment in managing Medicare administrative functions. 2. Full and open competition was utilized, suggesting a potentially competitive pricing environment. 3. The contract duration of approximately 2308 days (over 6 years) indicates a long-term commitment. 4. The Cost Plus Award Fee (CPA) structure incentivizes performance but requires careful oversight. 5. The award was made to a single entity, NHIC, Corp., for a specific administrative function. 6. The contract falls under the Direct Health and Medical Insurance Carriers NAICS code.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging without specific performance metrics and detailed cost breakdowns. The total award amount of over $167 million over more than six years suggests a substantial operational cost. Comparing it to similar Medicare Administrative Contractor (MAC) contracts would provide better context on whether the pricing is competitive for the services rendered. The Cost Plus Award Fee structure means the final cost could vary based on performance, making a definitive value assessment difficult without post-award data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for this significant administrative service. The presence of multiple bidders typically fosters price discovery and can lead to more favorable pricing for the government. The number of bidders (5) suggests a reasonable level of competition for this specialized service.
Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the most cost-effective solution for managing Medicare administrative functions.
Public Impact
Beneficiaries of Medicare administrative services, including healthcare providers and beneficiaries, indirectly benefit from efficient contract management. The contract supports the operational delivery of Medicare administrative services across a defined jurisdiction. The geographic impact is focused on the service area covered by the Medicare Administrative Contractor. Workforce implications include the employment of personnel by NHIC, Corp. to perform the contract's duties.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns due to the Cost Plus Award Fee structure if not rigorously managed.
- Complexity of managing a large-scale administrative contract requires robust oversight to ensure efficiency.
- Dependence on a single contractor for critical administrative functions could pose a risk if performance falters.
Positive Signals
- Awarded through full and open competition, suggesting a competitive process.
- The Cost Plus Award Fee structure incentivizes high performance and efficiency.
- The contractor, NHIC, Corp., is likely experienced in managing complex government contracts.
Sector Analysis
This contract falls within the Health Care and Social Assistance sector, specifically related to health insurance carriers and administrative services for government programs. The market for such services is characterized by large, specialized firms capable of managing complex regulatory environments and high transaction volumes. Comparable spending benchmarks would involve looking at other Medicare Administrative Contractor awards and large-scale health insurance administration contracts.
Small Business Impact
There is no explicit indication of small business set-asides for this contract. However, the prime contractor, NHIC, Corp., may engage small businesses as subcontractors to fulfill certain aspects of the contract, depending on their subcontracting plan and the nature of the services required. The impact on the small business ecosystem would depend on the extent of any subcontracting opportunities created.
Oversight & Accountability
Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS), the awarding agency. The Cost Plus Award Fee structure necessitates close monitoring of performance metrics and cost expenditures to ensure value for money. Transparency would be enhanced through regular reporting requirements and potential audits by government oversight bodies, including the Inspector General.
Related Government Programs
- Medicare Administrative Contractor Program
- Health Insurance Administration
- Federal Health IT Contracts
- Government Health Services
Risk Flags
- Cost Plus Award Fee structure requires diligent oversight.
- Long contract duration necessitates performance monitoring.
- Dependence on a single contractor for critical functions.
Tags
healthcare, medicare, administrative-services, cms, department-of-health-and-human-services, full-and-open-competition, definitive-contract, cost-plus-award-fee, nhic-corp, insurance-carriers, health-insurance
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $167.2 million to NHIC, CORP. JURISDICTION 14 PART A & B MEDICARE ADMINISTRATIVE CONTRACTOR
Who is the contractor on this award?
The obligated recipient is NHIC, CORP.
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).
What is the total obligated amount?
The obligated amount is $167.2 million.
What is the period of performance?
Start: 2008-11-14. End: 2015-03-11.
What is the historical spending pattern for Medicare Administrative Contractor (MAC) services under similar contracts?
Historical spending on MAC services varies significantly based on the geographic region, the specific administrative functions delegated, and the contract type. Contracts can range from tens of millions to hundreds of millions of dollars over their lifecycle. For instance, other MAC contracts awarded through full and open competition have also been substantial, reflecting the complexity and scale of managing Medicare claims and provider services. Analyzing past awards for MAC jurisdictions can reveal trends in pricing, contract duration, and the types of contractors that are successful. This particular contract's award of over $167 million over approximately six years aligns with the expected scale for such a critical administrative function within the Medicare program. Understanding the historical context helps in assessing whether the current award represents a fair market price and efficient use of taxpayer funds.
How does the Cost Plus Award Fee (CPA) structure impact the contractor's performance and government oversight?
The Cost Plus Award Fee (CPA) structure is designed to incentivize contractor performance by allowing the contractor to recover allowable costs plus a fee that is composed of a base fee and an award amount. The award amount is determined by the government based on pre-defined performance objectives and metrics. This structure encourages the contractor to go beyond minimum requirements to achieve higher performance levels, potentially leading to better service delivery and cost savings. However, it also places a significant burden on the government to establish clear, measurable performance standards and to conduct objective evaluations to determine the award fee. Robust oversight is crucial to ensure that the government is paying fairly for the performance achieved and to prevent potential cost creep or manipulation of metrics. Regular reviews and audits are essential to validate performance claims and ensure accountability.
What are the key performance indicators (KPIs) typically used to evaluate Medicare Administrative Contractors?
Key Performance Indicators (KPIs) for Medicare Administrative Contractors (MACs) are designed to measure efficiency, accuracy, responsiveness, and compliance in managing Medicare operations. Common KPIs include claims processing accuracy rates, turnaround times for claims processing and appeals, provider inquiry response times, fraud detection rates, and adherence to program integrity requirements. Additionally, metrics related to customer satisfaction (both from beneficiaries and healthcare providers) and the effective implementation of new policies or system changes are often included. The specific KPIs for this contract would be detailed in the performance work statement and would directly influence the award fee component of the CPA structure, ensuring that the contractor is held accountable for meeting critical operational goals.
What is the typical track record of contractors awarded large Medicare administrative contracts?
Contractors awarded large Medicare administrative contracts, such as NHIC, Corp. in this instance, typically possess a significant track record in government contracting, particularly within the healthcare sector. These firms often have extensive experience in managing complex administrative processes, navigating regulatory environments, and handling large volumes of data and transactions. They usually demonstrate a history of successful contract performance with federal agencies like CMS, the Department of Defense, or other health-related entities. Their capabilities often include robust IT infrastructure, compliance expertise, and established quality assurance processes. A thorough review of a contractor's past performance, including any past performance evaluations or contract disputes, is a critical component of the source selection process for such significant awards.
How does the geographic jurisdiction assigned to a MAC impact its operational scope and costs?
The geographic jurisdiction assigned to a Medicare Administrative Contractor (MAC) significantly impacts its operational scope and associated costs. Each MAC is responsible for a specific region of the country, and the number of Medicare beneficiaries and healthcare providers within that region directly correlates with the volume of claims processing, customer service inquiries, and other administrative tasks. Larger jurisdictions with more beneficiaries and providers will naturally require more resources, personnel, and infrastructure, leading to higher operational costs and contract values. Furthermore, the specific healthcare landscape within a jurisdiction, including the prevalence of certain types of providers or medical services, can influence the complexity of the administrative work. Therefore, the contract value is often tailored to reflect the size and complexity of the assigned geographic area.
Industry Classification
NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers
Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 5
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: DXC Technology Company
Address: 402 OTTERSON DR, CHICO, CA, 95928
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $167,216,994
Exercised Options: $167,216,994
Current Obligation: $167,216,994
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Timeline
Start Date: 2008-11-14
Current End Date: 2015-03-11
Potential End Date: 2015-03-11 00:00:00
Last Modified: 2023-10-03
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